tv Street Signs CNBC September 30, 2016 4:00am-5:01am EDT
good morning, everyone. welcome. you're watching "street signs". i'm louisa bojesen. >> i'm carolin roth. these are your headlines. >> deutsche bank shares nose diving on reports that multiple hedge funds are withdrawing their business from the embattled german learned. >> the selloff broadens to other banks. deutsche bank slump drag on the dax, germany's blue chip poised for 3.5% loss on the month there by underperforming it's european peers. other asset classes feeling the heat with the euro dropping to an eight week low, raising
concerns about the financial sector. all right. good morning, everybody and welcome to "street signs". we got a lot going on this morning. a lot. especially when looking at the deutsche bank share price, shares plunging dipping below ten euros in europe after a selloff in the u.s. listed part of the stock which launched its highest daily trading volume on record. in fact eight times the 30 day average what we were seeing. deutsche bank currently now down somewhere in the region of what 7% or so, so we're still seeing continued selloff take place on the back of the speculation. >> absolutely. overnight reports claiming a group of u.s. hedge fund clients cutting their exposure to the
bank, withdrawing cash and securities as well as winding down certain trading activity. germany's largest lender scrambled to reassure investors saying it was confident majority of clients understood the bank's financial position. the bank told cnbc there was no question the bank had a perception issue but reassured it remain profitable. this is in the wake of a series of rumors that the german government was planning a rescue plan in the event the lender couldn't raise private equity and berlin has denied. there was a letter sent to deutsche employees. i'll bring the highlights. it said uncertainty about the u.s. is no pressure on the share price when you look at the settlement with other banks for similar issues. he says deutsche bank has a strong foundation, he's alluding to liquidity reserves to the tune of more than 215 billion
jours. t -- euros. the reports about hedge funds pulling business from deutsche bank, yes, they are unsettling but once again alluding to the very strong foundation that deutsche bank has. >> there's a lot of speculation and a lot of people would argue these problems have been ongoing for quite some time. now part of the moves that we're seeing have to be market driven. we've seen this in the past where hedge funds follow each other and you take up big position. the other part has to be based on something more, one might think. you know what i mean. there might be more forces at play here. and they go on to talk about how our task is to make sure the distorted views of the bank don't affect our daily business and saying deutsche bank has a strong foundation and uncertainty about the u.s. fine
is no basis for pressure on the share price. but, there's speculation whether or not the fine triggered this or whether tissues were there to begin with as well. >> i almost don't want to use that word or analogy but is this a lehman moment in a way that confidence is eroding so quickly. i know foundations are very different from what they were eight years ago. i know financial sector is much, much stronger in terms of capital, liquidity, solvency and all that but i'm just worried about one report getting out there. yesterday, you saw that. it's sparking so much jittery action in the market. so much selling in the market. that seems to be continuing. how exactly do you stop that? what does deutsche bank need to do? >> and what's the spill over impact be if we were to see things worsening for the bank and would it be really that bad if the government were to step in as i know previous guests were talking about as well. the government steps in to save
the bank or help stabilize fundamentals. that might be a good thing for shareholders ultimately. >> what if there's a bail in? those are the new rules? what if depositors and creditors have to fill in the gap? that's completely unprecedented but those are the new rules and would that actually go down well with the german electorate a year before the germ elections? >> the recent fears were triggered by this $14 billion department of justice fine. throu threw the company's position into question. they are short of minimum requirements of 12.25%. they are falling short. and the concern of contagion rifz from the heart of global financial. it's described as the most important net contributor to
systemic risks in the global banking system p.m. let's get out to annett who has been covering this story in frankfurt. how nervous is management level in the towers behind you? what do you think? >> reporter: well, actually i think they are extremely nervous. i've never seen them behind-the-scenes being so proactively talking to the press, proactively trying to help, to have a coverage which is a little bit fairer than what they are currently seeing out there. i think there's a huge degree of nervousness inside deutsche bank. as you pointed out banking is about confidence. at the moment you lose confidence you have a serious problem with your business model. of course, currently what we're seeing is only a little liquidity trading. you don't realize. hedge funds taking away their money. but the big question is when do big tickets like the big ones on wall street or also here are taking away their money and put
it into different banks, into other banks? we had it at the height of the financial crisis when many corporate clients were considering and also did transfer their assets to savings banks which are still here in germany, very stable savings banks which has state backing, of course. of course we are until far away from such a scenario. but as you were pointing out it can be a very, very quick development. things can move very fast when it comes to eroding trust in the banking sector. currently the capital ratios are still very fine. they are actually even better than the ecb is demanding at the moment, currently the core one, tier one core ray show, the faith in one is at 12% and the ecb is demanding 10.75%. liquidity reserves are very high. so the bank in itself is stable.
but the market is telling you something else. there's a huge degree of nervousness. many people are speculating that what comes next if there's so much nervousness surrounding the shares. >> thank you so much. let's get another german voice on this. joining us now is the president of zew. at what point will the german government have to step in, even though so far deutsche bank said we haven't asked for help from the german government, even though the german government said we're not ready to step in. at what point will that become a self fulfilling prophecy? >> the german government, it's a hard time to step in. we saw the italian banking problem and the german government says we have to stick to the rules. so we might gate bail in and
then the next step the government would step in. i think there's still a long way to go. we see problems on the equity markets, the stocks are down, we have, at zew done some study on the equity requirement and definitely the german deutsch bank needs more chittliquidity. i think more equity is need and it's a problem for stock holders. the government will come in. >> you say a bail in is a long way off. those are the new rules that many banks will have to adhere to. it will set a very dangerous preaccident but don't you think this at some point will become reality that depot it is deposi creditors have to take up the
losses. >> we did the treasure test. the stress test worked out and i think there's still a regulatory issue. on tuesday everybody was skeptical whether the bank was soldier vents. i think it's still a long way to go and deutsche bank is working hard to go that way, but then we see the next step. actually we have these rules and the rules say that the next step would be a bail in. however, it is a stemic bank and other slugs might be possible and definitely ecb is sending their support and at the final stage the government would have to step in. but still a long way to go. >> good morning. the italian economy minister quoted by reuters saying deutsche bank's problems have to be solved quickly. we've seen what seems to be a knock on impact from worries of deutsche and the european banking sector spilling over
into the u.s. as well as in asia. what do you think the time frame will be before we start to see another, another measure as it were if we were to head down that route? >> i agree with you. it has to go fast. you know, deutsche bank was saying, you know, they look better from the outside than the inside. so there's different signals. they have to come clear. they have to get more transparency on their products. i think they have to go fast. banking sector is, you know, you can't. wait. >> i appreciate it. thank you very much for your time. just want to show you the rate across for the other european banks this morning. we're seeing a whole lot of red. rbs off by 3. and commerzba off as well.
this morning we're seeing one of its executives leaving the bank as well. that's not helping sentiment. let's get another voice from the credit side. senior credit analyst has just joined us around the desk. does it help that these letters are being put out to employees and markets, don't they need to address this in a different way and more urgent way? >> well, good morning. i think it's obvious they address the issue. you would expect that in such a scenario to aid the customer and the employees. it's possible they are working behind-the-scenes with the doj to come to a reasonable settlement. at the same time i believe they are talking to the government for some sort of contingency plan. the rules are not as automatic as people suggest.
there's a lot of latitude in applying the new rules. also for a bank like deutsche, they don't have enough subordinate to -- so it was spread through a german insurance company. deutsche bank never used it. these are the power plays with the german factor. >> how does deutsche get from what you call vicious to a cycle. what are the steps they need to tackle? >> in the short term like the one overnight with the doj and deutsche to come to a reasonable agreement. we need to clarity of trade,
clarity on russian laundering and tweaks on the restructuring pl plan. we've seen very little appetite from interested parties. so it's possible they will have to put something else on the block. for example asset management or other parts of the bank. >> what do you think the options are at this moment or the best options out on the table. is the government going to have to step in? could deutsch choose and the government choose not to go down that route? would it be better for shalds if the government steps in? >> generally speaking the private investor would have an appetite for deutsche bank. that would be the best in the world. as we said before as this investigation drags on there's depletion of liquidity and risk is serious damage to franchise.
so the bank can become not very appe appealable to the investor base. >> we're looking at the bank off 5 home runs to 10% including many italian banks. are we heading down another leg of having to revisit the financial banking crisis? >> the funny thing is we always live with the fear of another lehman effect or fragility of the european banking system. over the last eight ears, there's a crisis every year. i mr aig in the basket. deutsche bank. it's something you have to live with. you never make the banking sector solvency solid because they have been doing so much.
but there's a framework in place from the central bank to provide liquidity as a backstop lever. >> at what point is this a buying opportunity? we're seeing the euro setting a low. at what point do you want to go in and buy? >> equities are taking a dim view and i would agree because on the equity side it's very little on the table. i think on the debt side it's quite positive what they are trying to do. so it's regrettable built focus on repaying the balance sheet. it could be an interesting opportunity. >> all right thank you very much. just want to draw your attention to the fact that bund yields are falling. impacting the euro/dollar which has been trading in a tight
range. we've seen euro trading lower on the back of the deutsche concerns throughout this week. >> the impact is broadly felt here in europe. definitely. coming up here on the show, optimism on oil appears to drain as well as investors await details of opec's output deal. we'll be discussing that right after the back. find us on twitter. let us know your thoughts on the banking system on deutsch bank. we'll see you right after the break.
deutsch solvency. they've got more than 115 billion euros in reserves. but there's concerns about the bank lotion business. the cac 40 off by 1.8%. a big decliner today, they are scrapping the dividend, restructuring their business. so there's no german, major german bank out there at this point which is paying a dividend. ftse 100 off by 1.2%. i want to show you the sectors one by one. the banking sector is dragging everything down. we're off to the tune of 3%. once again off the session loss. the dax is off almost 4% for the month of september. the euro stocks financial index is off almost 9%. >> thank you.
stocks in asia, trading lower. we go to singapore. talk us through the moves you're seeing there president what the deutsch troubles mean here in jump? >> it's all about the health of the financials. the financials are on the sharp end off the selling. fairly large risk off of that. the bottom line here is that heading into the new weekend and new quarter as well more importantly wants to make any big commitments or big bets in either direction until the dust settles on this one. a big risk on move especially in north asia, japanese equities under pressure, down by 1.5%. only bright stop, resilience was the pocket of strength, not a great deal but we saw it anyway in mainly chinese equities. the data wasn't too bad.
this is the private survey on factory activity. we did see an expansion 50.1 is the headline reading. so clearly over the demarcation line. a number that's consistent with the theme tending to rebounce. broadly the risks are still present and financials in the sharp end today. nobody wants to make any big bets heading in to the new quarter until the dust settles. back to you. thank you. we've been focusing on oil as well in the past couple of session. oil's two day rally proving pretty short-lived. crude operations trading lower among skepticism that opecess out put cut will be announced at a policy meeting in november, 30th of november leaving a number of unanswered questions when the agreement will come in to effect, what the quotas will
be for member countries. the head of the european gas and oil research. good morning. what do you think the effect of this opec deal will be? >> well, i think two things. first it's symbolic. they haven't talked about cutting. so saudi arabia and iran can sit down together and come to some sort of an agreement is a positive. the oil market has been looking for this for some time. oil has been going sideways or down a little bit for the last several months. so it is symbolic. at the same time you can understand why people are a bit skeptical. this is about several countries that you don't find easy to groe. we can paint a scenario where saudi arabia can cut by a million barrels a day. a couple other gulf states by a couple hundred thousand barrels a day. russia comes in as well. try to get the russians on their
side. 1.6 billion barrels a day cut and coming out in november i think that would take care of iran's aspirations, as take out southeast current surplus. may see oil up to mid-50s. >> why do we want the higher oil price at this stage? $40 to $50 per barrel at the moment seems like a pretty okay level to be at. >> well the companies, the bigger integrated have found a way to make that work by cutting the service cost in particular. however it's the countries which are suffering, venezuela is in a terrible state. nigeria, libya obviously have their own issues. saudi arabia, iran depend on oil for their budgets. they've had to make significant cuts. they need to see oil prices higher. that's the reason why it's happening. >> you say it's imperative russia and the u.s. play along. what's the risk that either of
them don't adhere to this deal? they are not even part of opec. why should they? >> the u.s. goes its own way. russia, though, has bumped its production up to very high levels, almost all time highs at the moment. it's in their interest, again, to keep oil prices a little bit higher. 50% of their federal budget is funded by oil. so, you know, they are as exposed as some of these other countries. you can see why they want to try -- >> oil producers are incredible ly nimble. if this deal goes through, if it's stuck to that won't happen again because that's going to upset all the positive benefits from that deal. >> there will be obviously some recovery in u.s. onshore. but i think there is a bit of kind of risk factor if you like put into the business plan of they companies.
not $100 any more. you're right. they are nimble and have adapted and there will be production increases. in the longer term, the amount of decline we got in this market will eventually solve this problem and we'll see higher prices. this is just bringing it forward. >> cut price of oil by the end of the year? >> 55 is, i think, is a reasonable expectation particularly if november s-at least not negative. >> okay. thank you very much. have to say, loads of you writing in and finding us with regard to deutsche bank and what's going on the european and global banking sector. keep your questions coming through on what you think if deutsche were a good think. is it a bad thing. overall health of the banking sector. we'll read your tweets later on the show. also check out world markets
"street signs" i'm carolin roth. >> i'm louisa bojesen. your headlines today. >> deutsche bank shares nose dive on reports that multiple hedge funds are withdrawing their business from the embattled german lender. >> john cryan looks to calm the fears. the selloff broadens to the other banks with credit suisse among the biggest losers. >> deutsche slump dragging on others. bund yields give up this week's
gains. we're seeing a lot of selling across these european markets today. the dax off by 1.5%. main culprit deutsche bank off by 7%, in part scrapping the dividend yesterday. some senior management members leaving the firm and deutsche bank, all these concerns around capital, around the fines, around them losing business. the cac 40 off by 1.6%. italy also losing 1.7%. the banking sector that once again is the worst performing sector in the european markets today. for the move september down by almost 9%. the dax in the month of september is off by almost 4%. so this by and large is the banking, the deutsche effect. i want to show you how this is impacting the currency markets. yes it is seeing some safe-haven
flows. we're seeing dollar/swiss at one month low. euro guess the swiss franc at one month low. the dollar a touch higher against the japanese yen. of course it's having a knock on effect in the bond markets as well because we're seeing buying across the board as investors flocking to some safe-havens. i do want to point out the ten year german yield is at a six week low. >> we got some fresh data on uk final reading for the second quarter gdp. fresh data tends to support the view there's no immediate shock to tuck economy from the brexit vote this as we're hearing the final cond quarter gdp reading shows a level of plus 0.7% quarter on quarter which means it was revised a little bit higher. plus 2.1% year-on-year which means it was unchanged in the
previous reading. i'm also just digging out the business investment final reading as well. 1% quarter on quarter. business investment has gone up. final business investment year-on-year, unchanged minus 0.8%. real household disposable income 2.9% versus 3.4% and household savings ratios 5.1% which means it's at its lowest level since the third quarter of 2008. >> let's get back to deutsche bank story. deutsche bank boss is trying to calm market fears. in a letter to employees it says there's market forces to undermine confidence in the bank. he urges them not to let the distorted views affect their daily business, adding that deutsche bank has a strong foundation. we've seen these letters time and time again but do they lose their effectiveness in terms of
shoring up morale at the bank? >> that's the question. the at the moment they must be looking at all options. they said already the government option is one that's not on the table right now. we talked about that yesterday. only a last resort if they go down that route. but for sure they are looking at these options. jpmorgan talking about how any decision by deutsche bank to raise capital will be triggered bay loss in client revenue not with the rbs settlement with u.s. authorities. they've run the numbers. they say any fine above $4 billion mean deutsche bank's reserves will not be enough. they conclude it would put the german lender's capital at risk. throughout the show we've been getting a variety of views on the bank. take a listen. >> eventually the bank could be a threat to the eurozone, i
doubt that the ecb would be interested. >> this is a screaming buy. this is the sale of the century. you should be stepping in and acquiring deutsche bank stock at this price. >> definitely. if you're raising capital to pay a fine it doesn't mean the capital you'll raise will enable you to make more money. investors are not interested to give new money to an institution that will not actually after that money is injebtd will make more money. >> in european banks these people they are awash with money and banks tend to go bust because of lack of liquidity. it's the understanding of banking by the general market which is probably lack ppg the analysts can sit there and say everything is fine and people go saw theoretical.
>> deutsche bank is in serious trouble and regulators and international agencies have said deutsche bank has the biggest risk of all global banks and, therefore, of course, there are concerns if deutsche bank is in trouble and every, ever deeper it could hit the whole market. >> you have been super active this morning in sharing your thoughts on twitter with us on deutsche and the european banks. let me read out a couple of all of your tweets coming through. one says, this is a case study of market interconnectiveness. unknown risk. we tweeted the picture of the spill over from deutsche. what's there to be nervous about. if it's that bad they will get a bail out. russian markets say i think deutsche bank shares will bounce by 15% once the doj announce the fine. i think we've briefly went $10
per share. >> we've see se bargain hunting over the last few trading days before that hedge fund report was out. keep in mind deutsche bank shares did rise towards the 11 handle in yesterday's trading session. there's some bargain hunters who think this is the bottom and actually we're going to, you know, sell on the news that there might be a settlement. once that's confirmed that the settlement will be a lot lower we'll buy back the shares. >> some people might be looking at that. there are a couple of people writing in. deutsche bank looking good. are you buying at the moment? >> some people have said that they might want to be buying the debt. let's talk about deutsche bank's euro contingent convertible bonds. let's go back to frankfurt. how exactly do these cocos work?
>> reporter: cocos sort of convertible bonds, of course and at a certain level if the capital of the bank would fall below a certain level then those bonds will directly transfer into equity. so they are quite risky. so to say -- of course with cocos falling to new record loss there's heightened concern that the bank's capital will fall in the course of all these fines from the united states. but we don't know yet. ate huge speculation. i think the cocos are reflecting the nervousness surrounding the situation at deutsche bank. not just the cocos but the bonds which are the most risky normal bonds if you like of the bank and the pay out. those bonds as well have touched
record loss. not only the equity side of things who are feeling the brunt here, deutsche bank, also the bond market who is actually playing catch up here to the equity nervousness. of course, from deutsche bank we are currently hearing all the time the credit stories in tech. the equity market is super nervous. still they are insisting their credit story intact. let me also talk a little bit of liquidity. don't forget the ecb. they have a lifeline with ecb. they can ask for as much money as they want in case of a liquidity crisis. we won't face another lehman moment so quickly. the comparison at that time might be a little bit over exaggerated. >> thanks so much for that. let's turn our attention to the other big german lender which is in trouble not as much trouble they announced that major rebound, they are spligt up the
bank and this morning we're getting more commentary from the ceo who says or confirming that they are targeting 1.1 billion euros in cost savings by 20. we have the press conference going on in frankfurt to outline the 2020 strategy points that they sent out yesterday. the ceo saying the bank the stable but not profitable. the head of corporate lending is leaving and that seems to have been a concern as well. >> greece is expected to grow at 2.7% next year and the first indications. i'm thinking that's very optimistic, 2.7%. >> a ton of countries would be happy with that growth. >> the country has been grappling with seven years of recession. how does the government arrive at this 2.7% number?
>> reporter: that's a great question. every analyst out there would like that question answered quite frankly because the government here seems to be the only people that think the economy will manage 2.7% growth next year. i spoke to the leader of the opposition and we were talking about this idea too. he said there's no way that this growth is possible, the policy mix of this government that's pulling together here will be the opposite for growth. they are raising taxes left, right and center. we've seen corporation tax jump this year. they are raising taxes on heating oil, diesel, property taxes too. i said to him okay fine you can criticize the government but tell me what you would be doing at this stage? listen in. >> what we've said from the beginning there's room for a different type of fiscal policy while maintain short term fiscal targets. we proposed specific tax cuts,
corporate taxation from 29% to 20% and 30% cut in property tax. these are approximately would cost between 1.3 and 1.4 billion euro. so what we say is that there's room for the spending cuts in greece. >> where would you cut spending? >> still discretionary spending on the public administration side that can be contained. if you look at the perry ferry of the greek state, state-controlled enterprises there's a constant overshoot in spending which is tolerated by the current government. i'll tell you why it's tolerated. this government is still behaving in the old manner that many previous governments did. >> your part included? >> yes. to a certain extent that's true but i was decided since the moment i was elected to make a break from the past.
i was minister of reform and implemented a very specific policy when it came to making the public more efficient. no one can accuse me of engaging intact ticks which is what this government is doing. >> they are doing the opposite of what they promised to do when they came into power. >> what they are doing is pretending to implement real reforms. there's great dissent within this government even privatization, decisions which are taken up to the level of the prime minister are frequently overturned by ministers. this is a government wyatt heart is a radicalal leftist group of people. they were forced to sign a third bail out program which back in 2013 was completely unnecessary. they are trying to implement it but they don't believe in these
type of reforms. if you want to send a real signal to the national capital markets that greece really is changing we the government is fully committed to these type of reforms. that's the main reason why we're asking for an election. i believe we have the full capacity to win this election. should this happen, greece will have a competent pro reform government and i think that this government will be in a position to attract foreign investment and will be in a position to implement policies that will deliver the true growth potential of the economy. >> reporter: new democracy, the party has taken criticism for mismanage the economy. but he's trying to say we're an old party but with fresh new ideas. he's making enemies within the party. i'm not going to criticize anybody else without criticizing my own party. so my sense is there's a sea change.
he's calling for immediate selections because he believes the country needs to be on a different track. he's six to ten percentage points ahead. not enough for a majority. he's saying look for the first time fresh elections here shouldn't be seen as something negative they should be seen positive. i don't get a sense of what the catalyst would be but hey this is greece and it tends to surprise us. back to you. >> anything can happen there. another day another aleppo moment for libertarian presidential candidate gary johnson. johnson failed to come up with the name of one foreign leader after anchor chris matthews asked johnson to name his favorite international leader. come on, putin. may. anyone. >> it's just pretty extraordinary. i did watch the clip. i had to watch it a couple of times. he was nervous. cat got his tongue whatever.
trudeau, his neighbor in canada. the mexican president. the list goes on. it's phenomenal. i don't know if it says more about us as a population that we put people in these positions. but on what grounds? it's baffling on so many fronts. the u.s. newspaper, "usa today" have come out in strong opposition to republican presidential nominee donald trump. this is the first time in the paper's history it intervened in a presidential election. they warned trump was unfit for the presidency. rather than endorsing hillary clinton the paper urged vote towers stay true to their convictions. gina sanchez is with us this morning. let's start with the u.s. presidential election. busy morning. who is going to be better for the u.s. economy and for the markets out of trump and clinton? >> no question. clinton is clearly, if your
portfolio could vote it would vote for hillary clinton. >> why? >> well, there are a number of issues. if you look at the policies that each proposed, they have, obviously, very different impacts. you look at hillary clinton and she's basically proposing some spending, some fiscal spending, that fiscal spending is financed by increased taxes but those taxes are largely that burden is carried on the 1 million and up earners, the fair share tax, the buffett tax. and the end result is that you basically get more spending in to the economy in terms of construction, you get a lot of infrastructure spending, health care spending, education spending, and that has benefits. she also has immigration reform that also has benefits, has some costs to society as well but has benefits with past immigration and plans for an increase in minimum wage. all of those things are net positive. if you look what trump is
attempting to do, he wants to increase tariffs. those tariffs while they may seem they are helping with the economy, we import a lot of intermediate goods. they increase our own inflation. he wants to cut taxes for the super wealthy. and, you know, he wants to have a mass deportation which would be v-very expensive and these things end up increasing the budget deficit. >> let me stop you there for a moment. we had a guest on the other day a trump presidency could be very dollar positive because there will be massive fiscal loosening. you alluded to that point as well these massive tax cuts. how you can see that gdp in the u.s. will fall by 5% if trump becomes president? >> the way that those tax cuts are implemented -- obviously the way fiscal loosening happens, it has to happen in a way that has positive effects into the economy.
in a way he's basically talking about corporate tax holiday, he's talking about taxes on the upper end of income earners, and those do not actually have the same beneficial effect. they have positive effects. don't get me wrong. however the negative effects from the 45% tariff on china and 35% tariff on mexico that he has talked about, those are pretty impressive. they don't have to be moderated. section 301 of the u.s. trade law actually gives the president full discretion to act if he or she deems another country to be aggressive and it is only in their estimation. they don't have to have congressional approval or wto approval. that loophole assumes the president will act responsibly. >> what sectors do you want to buy in the case of a clinton
presidency. >> clinton presidency has a massive positive impact on the construction sector. that's the most positive sector. it has positive exacts to other retail spending. certainly one that comes off the minimum wage increases. so i would say those that manufacturing, that's a positive impact from fiscal spending. so you see. they are significant positive. >> gina, thank you very much. gina sanchez ceo of chantico gobble. we'll talk more about the banks. keep your tweets coming. german lenders may struggle to reverse their ailing fortunes. we'll look at britain's banks and one bank that's bucking the brexit blues. we'll be right back. guess what guys, i switched to sprint. sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference
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welcome back. you're watching "street signs". the department of justice is looking for so-called omnibus settlement with deutsche bank, credit suisse and barclays to punish them for misselling mortgage securities. according to the "financial times" the u.s. regulator is hoping to make a bigger impact by grouping the fines for the three banks into a single deal. earlier this week mario draghi refused to accept the charge that negative interest rates were to blame for create judging systemic weaknesses in banks. >> if a bank represent as systemic threat for the eurozone this cannot be because of low interest rates. it has to do with other reasons. >> here's the picture of the european banking sector this morning. it's a lot of red. deutsche bank cutting some of its previous losses only down 5.5%. at some point this morning we
saw it dropping below that 10 threshold. psychologically important, of course, on reports that some hedge funds stopped doing business with the bank. credit suisse off by 3.4%. rbs falling by 2.5%. i want to get out to ceo of oak norris bank. you're a small bank. is there a case that given that we're seeing so many problems, litigation problems with the big european banks out there, smaller is better when it comes to banking? >> massive advantage of being a new bank in the current environment is that you don't have any of that backlog or legacy which large banks do. therefore you can concentrate on business which for us is lenning to mid-market growth coins the uk. which post-brexit is doing phenomenally well as the larger banks are pulling back and having to deal with a number of issues that they've had ongoing
since the financial crisis. also to determine how the book looks in a post-brexit world whereas a new smaller world go out there and service smaller companies and provide financing that they need. >> what about big corporates. they will be heavily dependent on the big investment banks. they can go to a small bank like you. in a way they still need to exist and need to be saved by government. >> absolutely. the big banks have a very, very important role to play clearly in the global economy and for large corporate that's their route to market and ultimately you go into the bond markets, low leverage markets for their borrowing requirements. therefore you need a very well functioning overall financial system. >> what are you thinking in terms of your own growth given if you have done so well within the first year of your existence do you continue to say okay we want to continue this organic growth story from within the bank or do we look at emerging
with units from elsewhere? >> so, look, ultimately we started this business because we felt there was a large problem in the uk and the large problem being the ability to find financing as a mid-market growth business, something which i experienced in my previous business actually building that in the uk. i think that continues to exist there for the organic opportunities, very substantial and one which we'll continue to bud on to solve that problem within the uk. saying that we'll look at opportunities as they come by to potentially look at acquisitions. >> something like the deutsche bank story that we're covering at the moment and the ramifications for europe's banking sector could that have an effect on tuck as well, with the spill over impact or indirect or direct lines as well? >> clearly like we experienced back in 2007, 2008, '09, et
cetera, the connectiveness of the whole global financial system is so high that's what's happening with deutsche will have ramifications across the sector. so stabilizing that situation is so important. obviously deutsche's headquarters, banking operations here in london, like you guys have discussed earlier, sort of reliance on hedge funds on being able to trade with banks like deutsche moving that business elsewhere. that causes that unfolding. such a fragile position and one that's critical to step into. >> many banks out there have been blaming the ecb for the low and negative interest rates. how big of a problem are low interest rates are for you >> look, low interest rates for a bank generally are not good. at the same time we're servicing as a business our len cigarette to mid-market corporate sector.
within that sector because there isn't so much lending available negative rates don't have much impact. so right now for us not so important. but, again, is it a factor for the health of banks overall? yes, clearly. >> thank you so much for coming in. glancing at the u.s. futures for this afternoon's trading sessions, implied open very flat. that's it for today's show. have a lovely weekend. i'm louisa bojesen. >> i'm carolin roth. "worldwide exchange" is up next. have a great weekend. bye-bye.
shares slam, the stock don't slide and the questions about the firm's stability. global market fears. could this be another lehman brothers moment? the risks and reality. u.s. versus europe. the ryder cup tees off this morning. "worldwide exchange" begins right now. ♪ good morning. welcome to "worldwide exchange". happy friday. i'm sara eisen. >> i'm